The foreclosure proceedings are related to the world of mortgage loans. Foreclosure proceedings are judicial steps taken to realize unpaid dues. Foreclosure proceedings are as old as the hills. From time immemorial there are lenders and borrowers. There are Shylocks following foreclosure proceedings that vary from time and place but are basically the same to realize his pound of flesh!
A mortgage is a legal contract by which the borrower is given a loan by the lender under certain conditions. A property is kept as security or collateral. Sometimes other assets like bond papers or valuables may also be kept as security. But when the borrower takes a loan to buy property the latter is kept as security by the lender. If conditions are broken and the borrower fails to keep mortgage repayment schedule current then the lender initiates foreclosure proceedings to realize his loan. Foreclosure proceedings may also be started by the government to realize unpaid taxes.
The first step in foreclosure proceedings is the issue of warning notice or NOD (Notice of Default) to the borrower. In initiating foreclosure proceedings the lender has also to notify the court to seek its permission. In foreclosure proceedings the grace period differs from state to state. Recently strong steps are being taken in different states of USA because of the ongoing foreclosure crisis to give the borrower at least 90 days period to get back on rails and sort out matters with the lender.
The next step in foreclosure proceedings is the hearing at court wherein the court checks on the veracity of the allegations of the lenders. If satisfied then the green signal is given for the next step in foreclosure proceedings - the court auctions.
The final state in foreclosure proceedings is the repossession of the property by the lender (usually the banks) when the court auction fails. The house is taken over and liens free, it is now placed in the market like any other piece of property.
USA is now in turmoil because of the foreclosure crisis. The sub-prime mortgage with floating interest is largely held responsible for this catastrophe. The calamity is affecting not only the two main players of the game, the lenders and borrowers, but going beyond the game courts to infect entire society. Even pets are affected. They are being abandoned en masse by evicted foreclosure victims desperately trying to survive themselves. Initially foreclosure proceedings were taken against the middle and low-income group but today the tentacles are grabbing the rich and famous too. Vacant foreclosed houses are eyesores attracting crime and disease. The government is losing out on taxes and consequently public utility services are suffering.
There are so many units being foreclosed upon that the lenders are now reluctant to proceed with foreclosure proceedings as these are costly and time consuming. With the value of houses having fallen in the market to record low levels the lenders are finding it more judicious to forego foreclosure proceedings and opt for understandings with the borrowers.